With the rising awareness of environmental concerns and the push towards greener technologies, electric vehicles (EVs) have gained significant popularity among consumers. To further incentivize the adoption of electric vehicles, the U.S. government has introduced the Federal EV Tax Credit, providing financial benefits to eligible EV and plug-in hybrid vehicle buyers.
Ford offers several electric and hybrid models that may qualify for this enticing tax credit. If you are interested in purchasing an EV and want to take advantage of this tax credit, our sales team at Mike White Ford can help guide you toward the right Ford EV.
What Does the New Law Provide?
The Federal EV Tax Credit is designed to reduce the financial burden of purchasing an electric vehicle, making EVs more accessible to the general public. Federal tax credits for EVs have existed since 2009, but legislation enacted in 2022 expanded the availability of the tax credit. At the same time, there are restrictions on who can take the credit and which vehicles qualify for the credit, so it is essential to ensure that, when seeking a vehicle, you meet the qualifications under federal law.
The basic terms of the EV tax credit are that, for qualified buyers and vehicles, taxpayers can take a $7500 vehicle tax credit for purchasing a new EV and up to $4000 for buying a used EV. However, there are some important limitations to note:
- Income Limitations: The EV tax credit is only available to EV purchasers who make less than $150,000 for single filers, $300,000 for couples who file jointly, and $225,000 for filers who file as head of household.
- New Vehicle Price Limitations: The tax credit does not apply to EVs above a certain price threshold. For new cars, the MSRP must be below $55,000 for EVs to be eligible, and for SUVs, trucks, and vans, the MSRP cap is $80,000. This rules out many luxury EVs and some standard EVs in higher-priced trims.
- Used Vehicle Price Limitations: There is also a price limitation for used EVs. To qualify for the credit, a used EV must have a purchase price of $25,000 or less, and the vehicle must be at least two years old. The credit is calculated by multiplying the purchase price by 40% but tops out at $4,000.
- Manufacturing Limitations: The manufacturing requirements may be the most complicated aspect of the new rules. The EV must have been assembled in North America to qualify for the credit, and a certain percentage of the battery components must have been sourced from North America.
One encouraging bit of news about the manufacturing requirements is that you don’t have to become an expert on where your EV was manufactured or how to calculate your credit. Under the new rules, when you purchase an EV from a dealer, the dealer will apply the credit directly to the sales price. In other words, you don’t have to wait until the tax-filing season to decipher whether you qualify for the credit; your dealer will know if the EV you purchase meets the new law’s requirements.
However, if you purchase your EV privately, you may have to do some homework. Thankfully, the government has created a helpful website that can take some guesswork out of whether your EV qualifies for the tax credit.
Ford EVs That May Qualify For the Tax Credit
Ford has been actively expanding its electric vehicle lineup to cater to the growing demand for low-emissions transportation. Some of Ford’s electric models that potentially qualify for the Federal EV Tax Credit include:
- Ford Mustang Mach-E: The all-electric SUV inspired by the iconic Mustang offers impressive performance and a range of up to 300 miles, making it an attractive option for EV enthusiasts.
- Ford F-150 Lightning: Ford’s highly anticipated all-electric version of the popular F-150 truck is a groundbreaking entry into the electric pickup market, combining the capability of the traditional F-150 with eco-friendly features.
- Ford Escape Plug-In Hybrid: While not a fully electric vehicle, the plug-in hybrid version of the Escape may also qualify for a federal tax credit.
- Ford E-Transit: The E-Transit is an all-electric commercial van with a range of about 230 miles, making it an ideal choice for businesses that provide local delivery services. With the base price starting at just under $45,000, many models will qualify for the federal EV tax credit.
If You Are Shopping for an EV, Find Out If You Qualify
The Federal EV Tax Credit can appreciably reduce the cost of an electric vehicle, but buyers should independently verify their eligibility for the credit. Tax laws and incentives change, and individual circumstances vary. If you are in doubt, consult a qualified tax professional to understand how the law applies to your specific tax situation.
However, as people consider making the shift to an EV, it is nice to know that there are incentives that can help make your decision easier. The Federal EV Tax Credit presents an opportunity for those considering purchasing an EV to make the switch, and we encourage you to review Ford’s lineup of electric models. To learn more about Ford EVs or arrange a test drive for one of our EV models, contact Mike White Ford today.